Apple delivered higher-than-expected earnings and revenues for the second quarter, sending the company’s stock up more than 5 percent in after-hours trading. As expected, the company’s services segment posted strong growth but failed to offset slowing sales of the iPhone. Apple also gave strong revenue guidance for the third quarter.
Here’s how Apple’s financials compared to Wall Street analysts’ expectations.
- Earnings per share (EPS): $2.46 vs. $2.36 expected.
- Revenue: $58 billion vs. $57.37 billion expected.
- Projected third-quarter revenue: Between $52.5 billion and $54.5 billion vs. $51.9 billion expected.
The company said it would buy back an additional $75 billion worth of stock and increase its dividend 5 percent to $0.77 per share.
Sales of the iPhone, by far the largest segment, came in slightly better than expected at $31 billion for the quarter, a decline of 17 percent from the same period last year. Total product sales — which includes the iPhone, iPad, Mac, wearables, home and accessories segments — came in at $46.6 billion, compared with $51.2 billion in the same quarter last year.
The company’s services revenue grew 14 percent to $11.5 billion, versus $9.9 billion in the second quarter of 2018. On a call with investors, Cook said the company’s growing number of hardware users was “driving our services business to new heights.”
Apple has shifted more effort into its growing services business. The company last month announced the launch of subscription television service Apple TV+, digital magazine service News+ and gaming subscription Arcade. Cook said the company has 390 million paid subscribers across its current services.
Apple also launched a credit card with Goldman Sachs earlier this year. The tech giant is leaning on privacy as a competitive advantage against Google, Facebook and other companies that rely on advertising revenue.
Cook warned investors early this year that China’s weakening economy and trade tensions with the U.S. were weighing on the company’s revenues. The company has also seen fewer iPhone upgrades than expected. Apple’s stock rose more than 40 percent in the period since Cook issued the lowered guidance.
Earlier this month, Apple and Qualcomm settled a long-running royalty dispute and reached an agreement for future chip sales.